Instagram vs. Snapchat: Rivalry between social media firms heats up

Instagram’s Stories — a Snapchat-like feature that allows users to post ephemeral photos and videos — is stealing more of its rival’s thunder.

On Tuesday, Facebook-owned Instagram said 250 million people use this tool daily, surpassing the number of people who use Snapchat.

In the first quarter, Snapchat reached 166 million daily active users. On Tuesday, Snap’s stock dropped more than 2 percent following the news.

Instagram first introduced Stories in August, and since then, the number of people on the photo-sharing site who use the feature has been growing.

Users called out Instagram for copying Snapchat, but executives have brushed off the criticism.

“We think Stories is also another format that not only consumers but advertisers use,” Facebook’s global head of sales Carolyn Everson told CNBC on Tuesday. “You are going to see Stories in a lot of different platforms.”

Instagram also released a new feature on Tuesday that allows users to share a replay of their live video to Instagram Stories.

While Instagram Stories grows, Snap — Snapchat’s parent company — has been putting the emphasis on how engaged users are on its app.

But even that figure is dropping. In June, Snapchat Stories declined 50 percent compared to the same period last year, Mashable reported, citing data from social analytics company Delmondo.

It’s not all doom and gloom for Snapchat.  Yesterday, Time Warner announced it was teaming up with Snap to develop shows and advertise within the app. The companies didn’t disclose the amount of the deal, but media outlets, citing anonymous sources, said it was valued at $100 million.

Still, Snap’s investors aren’t too happy with the increased competition.

On Tuesday, Snap’s stock dropped more than 2 percent following the news to $17.29 per share.

Photo: An Instagram employee takes a video using Instagram’s new video function at Facebook’s corporate headquarters during a media event in Menlo Park on June 20, 2013. (Josh Edelson/AFP/Getty Images)


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